Inner City Condo Market Calgary

[Millions]

I was wondering what people think about the inner city condo market in Calgary.

Not buying right now but I already have a condo in killarney from 2007.

It`s still not worth quite what I owe right now but the Ctrain station will be about 600m away end of 2012.

Is the general though 3% a year until then or does anyone think its gonna tumble.

I know there is a one big rental building going up downtown that could hurt everyone.....

 

[RedlineBrett]

QUOTE (Millions @ Jun 26 2010, 11:27 PM) I know there is a one big rental building going up downtown that could hurt everyone.....

Every new condo building in the city is an apartment building hurting everyone. Dumb investors buying on presale and then having no choice but to rent them out.

Also connections within the developer`s network sees as much as 1/3 of these projects owned by insiders that intend to hold them as rentals... these presales are what get the developers approved for financing so they get in at great prices relative to the retail buyer.

Do NOT buy a condo downtown right downtown... Not unless you are very close to 200k for a two bedroom.

Buildings close to the LRT a little further out aren`t so bad as they are usually priced a little better... but you don`t want to be downtown for at least the next 5 years.

 

[Millions]

QUOTE (RedlineBrett @ Jun 27 2010, 11:28 AM)
Every new condo building in the city is an apartment building hurting everyone. Dumb investors buying on presale and then having no choice but to rent them out.



Also connections within the developer's network sees as much as 1/3 of these projects owned by insiders that intend to hold them as rentals... these presales are what get the developers approved for financing so they get in at great prices relative to the retail buyer.



Do NOT buy a condo downtown right downtown... Not unless you are very close to 200k for a two bedroom.



Buildings close to the LRT a little further out aren't so bad as they are usually priced a little better... but you don't want to be downtown for at least the next 5 years.






Yes I feel a little nervous. I bought back in 2007. 2 bedroom at 1915 26 St SW for 260!......One just sold beside me for $230K....Im hoping 230K is the low now and it will go up by 3% a year from here on out especially with the train....Or else im in trouble....I had bought it as a home but am renting it out now and it is negative cash flow ...



Hoping they dont crash further!

 

[gwasser]

QUOTE (Millions @ Jun 27 2010, 07:56 PM) Yes I feel a little nervous. I bought back in 2007. 2 bedroom at 1915 26 St SW for 260!......One just sold beside me for $230K....Im hoping 230K is the low now and it will go up by 3% a year from here on out especially with the train....Or else im in trouble....I had bought it as a home but am renting it out now and it is negative cash flow ...

Hoping they dont crash further!

I think condo prices for apartments have still not bottomed. I would focus on paying down your mortgage and on positive cash flow. Rents seems still to come down although Boardwalk states they came only down 5% or so from the high. Of course that is not counting `incentives`.

Most sellers in Killarney think that they should benefit from the LRT rather than future owners and thus a lot of stuff is still overpriced in that neighbourhood.

 

[MonteDobson]

Hi Matthew,

I can`t help but notice that this is about the 10th post regarding this condo. It appears as though it is causing stress in your life and my suggestion would be to unload this unit and cut your losses.

As the experienced Calgary realtors have stated, there will be little to no upside in this market segment in Calgary and unless you can make it cashflow for a number of years and paydown the mortgage, get rid of it and move on. We have one of these "dogs" currently in our portfolio (in another city) and am currently trying to convert to rent to own, or just sell and get out as it is a drain on both time and money.

Make a business decision and follow it through and let us know how you make out.

QUOTE (Millions @ Jun 26 2010, 11:27 PM) I was wondering what people think about the inner city condo market in Calgary.

Not buying right now but I already have a condo in killarney from 2007.

It`s still not worth quite what I owe right now but the Ctrain station will be about 600m away end of 2012.

Is the general though 3% a year until then or does anyone think its gonna tumble.

I know there is a one big rental building going up downtown that could hurt everyone.....

 

[Millions]

QUOTE (MonteDobson @ Jun 27 2010, 10:08 PM) Hi Matthew,

I can`t help but notice that this is about the 10th post regarding this condo. It appears as though it is causing stress in your life and my suggestion would be to unload this unit and cut your losses.

As the experienced Calgary realtors have stated, there will be little to no upside in this market segment in Calgary and unless you can make it cashflow for a number of years and paydown the mortgage, get rid of it and move on. We have one of these "dogs" currently in our portfolio (in another city) and am currently trying to convert to rent to own, or just sell and get out as it is a drain on both time and money.

Make a business decision and follow it through and let us know how you make out.

Yes, I have been considering the RTO route. Just signed new tenants to a year though so im trying to wait until that`s nearing its end.

It`s not the condo causing me so much stress but more just whether I should just hang on to it for 25 years. The $300 negative cash flow is paying of the principal. Tenants are paying interest off. This would be brought down if I take variable but thats only very short term I think.

As for boardwalk coming down 5 %. Seems conservative. My condo was rented out for $1500 2 years ago and now just $1200.

I will let you what I decide but selling is almost out of the question at this point unless someone out there wants to assume the mortgage!

Thanks everyone!

 

[Savard]

QUOTE (Millions @ Jun 26 2010, 11:27 PM) I was wondering what people think about the inner city condo market in Calgary.

Not buying right now but I already have a condo in killarney from 2007.

It`s still not worth quite what I owe right now but the Ctrain station will be about 600m away end of 2012.

Is the general though 3% a year until then or does anyone think its gonna tumble.

I know there is a one big rental building going up downtown that could hurt everyone.....

Hi, What is the new rental building that you are referring to? What stage is it at? Do you know who the owners are?
Thanks

 

[Millions]

QUOTE (Savard @ Jun 28 2010, 01:57 PM) Hi, What is the new rental building that you are referring to? What stage is it at? Do you know who the owners are?
Thanks


Don`t know by heart where it is but the owners are the City of Calgary. It was suppose to be a condo building but the developers went bankrupt. it is just a hole in the ground right now and I guess the City had no choice but put out the money to build something and they chose rentals.
Id have to find out where.

Downtown somewhere!

 

[RedlineBrett]

QUOTE (Millions @ Jun 28 2010, 07:25 PM) Don`t know by heart where it is but the owners are the City of Calgary. It was suppose to be a condo building but the developers went bankrupt. it is just a hole in the ground right now and I guess the City had no choice but put out the money to build something and they chose rentals.
Id have to find out where.

Downtown somewhere!

I haven`t heard anything about this.... I would think it would be pretty huge press...

There is the affordable housing development through the lecaille group on 4th ave and 8th st. That will add around 100 units or so I believe.

 

[schoobie]

Hey Matt,

I see your dilemma because I am on the exact same boat. And 25 years is a lot of time, I will be 60 y/o by then.

But there is a way to simulate how you will come out of this one. I have no idea how to paste images or upload files here, but send me a pm and I will send you back a simple model that I put together in excel to reveal in time a number of scenarios for situations like this one.

And again, no matter who you talk to, it is impossible to predict the future, no person on earth has that ability.

 

[tnguyen]

QUOTE (schoobie @ Jun 30 2010, 08:43 PM) Hey Matt,

I see your dilemma because I am on the exact same boat. And 25 years is a lot of time, I will be 60 y/o by then.

But there is a way to simulate how you will come out of this one. I have no idea how to paste images or upload files here, but send me a pm and I will send you back a simple model that I put together in excel to reveal in time a number of scenarios for situations like this one.

And again, no matter who you talk to, it is impossible to predict the future, no person on earth has that ability.
Do you mind to send me one too?

 

[gwasser]

QUOTE (Millions @ Jun 28 2010, 12:06 PM) Yes, I have been considering the RTO route. Just signed new tenants to a year though so im trying to wait until that`s nearing its end.

It`s not the condo causing me so much stress but more just whether I should just hang on to it for 25 years. The $300 negative cash flow is paying of the principal. Tenants are paying interest off. This would be brought down if I take variable but thats only very short term I think.

As for boardwalk coming down 5 %. Seems conservative. My condo was rented out for $1500 2 years ago and now just $1200.

I will let you what I decide but selling is almost out of the question at this point unless someone out there wants to assume the mortgage!

Thanks everyone!

Hi Matt,

That you are currently in negative cash flow is a pain. But that is a function of your rents, operating costs and LTV. All that will not stay the same over the next 25 years. In fact, a few years ago your rent was $1500, once we`re past this recession rents are likely to rise again. At the same time you are paying down the mortgage. Condo valuations may be falling right now, but they will improve over the long term, possibly back to its historical average of 6% per year increase.

So what really matters is whether you can hold on financially subsidizing this place at $300 per month - and it is not really subsidizing because your paying down the mortgage. In fact this is not much more than a `forced savings plan and in terms of profits from your rental operations you are breaking even - just not in terms of cash flow. If cash flow is really a concern, you could consider refinancing with a lumpsum. This may cost you a penalty though. Some lenders allow you to make an annual lumpsum to reduce the outstanding debt, but many don`t allow you to then lower your monthly payment they rather reduce the time of amortization. Oh, btw I definitely would take a look at a variable rate mortgage - looks like the unavoidable rise in interest rates has, once again, been postponed.

Falling into negative cash flow is not disastrous as long as you have that money available for the time being. No real reason to get concerned since over time things will work out. In the mean time you got a lesson (not even a hard one) in the negative aspects of leverage. Sometimes it is better to do nothing than to take action.

 

[DaveRhydderch]

QUOTE (gwasser @ Jul 1 2010, 09:44 AM)
Falling into negative cash flow is not disastrous as long as you have that money available for the time being. No real reason to get concerned since over time things will work out. In the mean time you got a lesson (not even a hard one) in the negative aspects of leverage. Sometimes it is better to do nothing than to take action.




I agree here. Hopefully too Matt you realize this board has given you all the advice you can have on how to deal with this condo.



The great thing about Real Esate Investing is you don't have to worry about it every day. You have a plan (which you can re-evaulate yearly but not daily) and you follow through with that plan.

 

[Thomas Beyer]

QUOTE (schoobie @ Jun 30 2010, 08:43 PM) ..

And again, no matter who you talk to, it is impossible to predict the future, no person on earth has that ability.
Here are TWO predictions with a related one

a) In 25 years you will be dead .. or 25 years older !

and

b) people still need a place to rent in 25 years .. and rents WILL BE HIGHER AS WILL BE THE PROPERTY VALUE .. and if you continue paying the mortgage it will be 0.

Conclusion: Appropriately levered, well managed, well maintained, well priced and well situated real estate will ALWAYS BE IN DEMAND .. today, 50 years ago .. and in 25 years !